4 ms·

> What's the cause, specifically? Home price gains that have far outstripped inflation or the average wage all have the same cause wherever it happens in any d

> What's the cause, specifically? Home price gains that have far outstripped inflation or the average wage all have the same cause wherever it happens in any developed country. It's entirely self-inflicted, on one end by policies that favor home ownership by privileging it above other kinds of assets (mortgage interest deduction, etc.), and on the other by policies that deter simply building more, whether to fight gentrification, preserve the character of the neighborhood, or reduce environmental impact.

tivert 3y ago
Having the average home price triple in a single decade is such a massive and rapid level of appreciation that I don't think you can reasonably attribute it to "the same cause wherever it happens in any developed country." There's going to be some unusual policy or economic situation driving it. The things you mention are only exacerbating factors that cause the effects to show up in home prices, rather than in some other metric. So, what specifically is happening in Toronto that's driving this (e.g. causing demand to go up, up, up)? Edit: I think I found the article I was referring to earlier: https://www.noahpinion.blog/p/maximum-canada-is-happening https://www.noahpinion.blog/p/maximum-canada-is-happening. It says Canada's population has increased by 15% over the last decade (35 million -> 40 million). Apparently Canada has one of the fastest population growth rates in the world, all from immigration since it's birth-rate is sub-replacement. US population only increased 7.5% over the same period.
- gottorf 3y ago
  > It says Canada's population has increased by 15% over the last decade (35 million -> 40 million). Canada is a developed country with a lot of natural resources; by a lot of metrics, it is one of the top 10 countries with the most natural resources per capita. It should easily be able to increase its housing stock by 1.5% a year at at a national level. It looks like Greater Toronto went from 5.7 million in 2013 to 6.4 million, ten years later in 2023[0], for a slightly lower rate of growth than the nation as a whole. A cursory search didn't reveal any sources for the number of dwelling units in the GTA over the same time period; but I'm willing to bet that if you combined that plus the expansion in the supply of Canadian dollars, you'll explain most of that growth in home prices. The money supply in Canada alone more than doubled in the past 10 years[1] vs. the 15% growth in population; so all else equal, you'd expect houses to transact for roughly 74% more CAD in 2023 than in 2013. The Toronto housing price index went from 154.36 in July 2013 to 360.78 this past July, at a 134% growth over the same time period. Most of that difference may be explained by a lack of building in Toronto. I'm sure some of it is other socioeconomic factors (increasing centralization of wealth in cities, etc.), but I don't think any of them are particularly unique to Canada. If anything else, due to its abundance of open land (granted, not all of it is economically valuable) as well as its natural resource advantages, Canada should be much better suited than other developed countries to be able to handle its housing challenges. The fact that it's not is mostly due to policy choice, which I posit are choices similar to those made in other developed countries. [0]: https://www.macrotrends.net/cities/20402/toronto/population https://www.macrotrends.net/cities/20402/toronto/population [1]: https://fred.stlouisfed.org/series/MABMM301CAM189S https://fred.stlouisfed.org/series/MABMM301CAM189S [2]: https://housepriceindex.ca/#chart_change=on_toronto https://housepriceindex.ca/#chart_change=on_toronto
  - Tiktaalik 3y ago
    > due to its abundance of open land (granted, not all of it is economically valuable) haha yes the latter statement a very important inclusion. Despite being the second largest country in the world there's very little viable, good land in Canada and a housing crunch was inevitable. Enormous swathes of Canada are sheer mountain, muskeg, and tundra. Lots of nice flat parts that are dramatically more important for feeding the world purposes than McMansion development. All the good places to build are where the cities currently are, and they're running out of land. The era of razing a forest at the margins and building more suburban strip malls is over. There are a multitude of reasons for high housing, but the strongest one is general anti-housing policies for decades, governments being completely asleep at the wheel and running into the end of easy suburban sprawl which has resulted in a game of musical chairs as people realize the era of the single family home is coming to a close. We're at the inflection point where new development must come through redevelopment and intensification instead of greenfield development. Other places (ie. Europe!) got here decades and centuries ago, but Canada is still in the denial stage.
    - gottorf 3y ago
      > there's very little viable, good land in Canada Canada's economy is 70% services (meaning, to varying degrees detached from the land) and as of May 2023, one in five Canadian workers were still working from home[0]. Surely some of those people could stand to build a city in the tundra ;-) Hailing from a country that is literally 1/100 the size of Canada yet is much more populous, I find arguments that Canada is out of land uncompelling. You are right, of course, that it could build up vertically a lot more than it has so far. [0]: https://www.benefitscanada.com/news/bencan/percentage-of-canadians-working-from-home-declining-in-2023-survey/ https://www.benefitscanada.com/news/bencan/percentage-of-can...

tivert 3y ago

Having the average home price triple in a single decade is such a massive and rapid level of appreciation that I don't think you can reasonably attribute it to "the same cause wherever it happens in any developed country." There's going to be some unusual policy or economic situation driving it. The things you mention are only exacerbating factors that cause the effects to show up in home prices, rather than in some other metric. So, what specifically is happening in Toronto that's driving this (e.g. causing demand to go up, up, up)? Edit: I think I found the article I was referring to earlier: https://www.noahpinion.blog/p/maximum-canada-is-happening https://www.noahpinion.blog/p/maximum-canada-is-happening. It says Canada's population has increased by 15% over the last decade (35 million -> 40 million). Apparently Canada has one of the fastest population growth rates in the world, all from immigration since it's birth-rate is sub-replacement. US population only increased 7.5% over the same period.

gottorf 3y ago
> It says Canada's population has increased by 15% over the last decade (35 million -> 40 million). Canada is a developed country with a lot of natural resources; by a lot of metrics, it is one of the top 10 countries with the most natural resources per capita. It should easily be able to increase its housing stock by 1.5% a year at at a national level. It looks like Greater Toronto went from 5.7 million in 2013 to 6.4 million, ten years later in 2023[0], for a slightly lower rate of growth than the nation as a whole. A cursory search didn't reveal any sources for the number of dwelling units in the GTA over the same time period; but I'm willing to bet that if you combined that plus the expansion in the supply of Canadian dollars, you'll explain most of that growth in home prices. The money supply in Canada alone more than doubled in the past 10 years[1] vs. the 15% growth in population; so all else equal, you'd expect houses to transact for roughly 74% more CAD in 2023 than in 2013. The Toronto housing price index went from 154.36 in July 2013 to 360.78 this past July, at a 134% growth over the same time period. Most of that difference may be explained by a lack of building in Toronto. I'm sure some of it is other socioeconomic factors (increasing centralization of wealth in cities, etc.), but I don't think any of them are particularly unique to Canada. If anything else, due to its abundance of open land (granted, not all of it is economically valuable) as well as its natural resource advantages, Canada should be much better suited than other developed countries to be able to handle its housing challenges. The fact that it's not is mostly due to policy choice, which I posit are choices similar to those made in other developed countries. [0]: https://www.macrotrends.net/cities/20402/toronto/population https://www.macrotrends.net/cities/20402/toronto/population [1]: https://fred.stlouisfed.org/series/MABMM301CAM189S https://fred.stlouisfed.org/series/MABMM301CAM189S [2]: https://housepriceindex.ca/#chart_change=on_toronto https://housepriceindex.ca/#chart_change=on_toronto
- Tiktaalik 3y ago
  > due to its abundance of open land (granted, not all of it is economically valuable) haha yes the latter statement a very important inclusion. Despite being the second largest country in the world there's very little viable, good land in Canada and a housing crunch was inevitable. Enormous swathes of Canada are sheer mountain, muskeg, and tundra. Lots of nice flat parts that are dramatically more important for feeding the world purposes than McMansion development. All the good places to build are where the cities currently are, and they're running out of land. The era of razing a forest at the margins and building more suburban strip malls is over. There are a multitude of reasons for high housing, but the strongest one is general anti-housing policies for decades, governments being completely asleep at the wheel and running into the end of easy suburban sprawl which has resulted in a game of musical chairs as people realize the era of the single family home is coming to a close. We're at the inflection point where new development must come through redevelopment and intensification instead of greenfield development. Other places (ie. Europe!) got here decades and centuries ago, but Canada is still in the denial stage.
  - gottorf 3y ago
    > there's very little viable, good land in Canada Canada's economy is 70% services (meaning, to varying degrees detached from the land) and as of May 2023, one in five Canadian workers were still working from home[0]. Surely some of those people could stand to build a city in the tundra ;-) Hailing from a country that is literally 1/100 the size of Canada yet is much more populous, I find arguments that Canada is out of land uncompelling. You are right, of course, that it could build up vertically a lot more than it has so far. [0]: https://www.benefitscanada.com/news/bencan/percentage-of-canadians-working-from-home-declining-in-2023-survey/ https://www.benefitscanada.com/news/bencan/percentage-of-can...